AfCFTA and Regional Trade Facilitation Efforts

The Project at A Glance

In a bid to increase intra-regional trade and promote regional integration across the African continent, the African Union launched negotiations for the African Continental Free Trade Area (AfCFTA). The Agreement was adopted and opened for signature in March 2018 and entered into force a year later in May 2019. At present, 54 countries have signed the Agreement while 44 have also deposited their instruments of ratification. The AfCFTA will create the largest free trade area in the world, with respect to the number of participating countries.
However, one of the main challenges hindering intra-regional trade is the weak trade facilitation environment. With more than a hundred borders dividing the African Continent, the lack of efficient customs procedures results in long delays, and documentary compliance challenges and makes cross-border trade very expensive. Against this backdrop, International Economics Consulting Ltd. (IEC), is supporting GIZ in completing a study looking at how the implementation of the World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA) by the different Regional Economic Communities in Africa (RECs) could serve as best practice, guiding the implementation of the Trade Facilitation Chapter of the African Continental Free Trade Area (AfCFTA) Agreement.

What We Found

Trade facilitation is the simplification, standardisation and harmonisation of procedures and associated information flows required to move goods from seller to buyer and to make payments. The implementation of trade facilitation initiatives can have considerable trade and economic impacts. The impacts of trade and facilitation measures can exceed those achieved by removing barriers to trade. Hence, the Members of the World Trade Organization (WTO) approved in December 2013 the Agreement on Trade Facilitation (TFA). Trade facilitation is instrumental in promoting regional integration. In Africa, trade facilitation can improve intra-African trade and enhance the region’s competitiveness. For instance, trade facilitation measures can support regional integration through the construction of trade infrastructure and cooperation at the border. However, the average time and cost necessary to trade across borders in Africa exceed the average of other regional groups. For example, when complying with border and documentary procedures, African countries require an average of 189 and 253 hours when exporting and importing, respectively. In comparison, countries in Latin America and the Caribbean require 119 and 149 hours, whilst the members of the OECD, on average, require 15 and 13 hours. The longer times increase trade costs.

Our Strategy and Impact

The implementation of Trade Facilitation Initiatives by the three Regional Economic Communities (RECs) under study – EAC, ECOWAS, and SADC – is aligned with the TFA. These include the simplification and harmonisation of international trade documents, standards, and customs procedures; and improving the efficiency of customs and other border agencies in expediting cargo clearance, among others. IEC made recommendations for the future implementation of the AfCFTA trade facilitation agenda based on the experiences and lessons derived from the three RECs. The EAC Secretariat established a regional Trade Information Portal that is linked to that of Partner States in order to meet the objectives of Article 1.1 (Publication) and Article 1.2 (Information availability through the internet) of the TFA. The EAC TIP is linked with the national trade portals in Kenya, Rwanda, Tanzania, and Uganda and provides a step-by-step guide on national import and export procedures. Thus, the trade portal provides information to traders about the different agencies they can consult, the documents required, the forms to be completed, and the costs to be paid. A similar approach can be applied in the implementation of the AfCFTA’s trade facilitation measures. Moreover, it was also found that the implementation of Article 8 (Border Agency Cooperation) of the TFA equally promoted regional integration by improving formalities when crossing borders, thereby resulting in less time and costs to trade. For instance, in SADC, it was found that the implementation of Article 8 contributed towards the improvement of management efficiency at regional borders. Some of the tangible improvements include increased efficiency in the One-Stop Border Posts management in Chirundu, on the border between Zambia and Zimbabwe.

Our Core Solutions

With the rapid proliferation of trade agreements worldwide, there are new market and investment opportunities for countries to explore. At International Economics Consulting, based on our extensive experience in international trade, we assist our clients by providing a detailed analysis of the key impacts of new trade agreements on their operations and competitiveness through an assessment of tariff, and non-tariff barriers, provisions on rules of origin, customs efficiency, the effectiveness of transport networks, and sustainability provisions, among others. We can help assess the opportunities in different markets, determine the feasibility and viability of projects, and benchmark the wider ecosystem to support business growth. We also support clients in navigating the policy landscape regarding international trade by establishing robust monitoring and evaluation framework through sophisticated real-time dashboards and reporting systems to ensure the best outcomes.